cloudBuy: A Dragon’s Den View by Kelly Barner

Editor’s Note: On December 17th, 2013 I had the opportunity to interview Year in the Life candidate cloudBuy, a New Wave company that that helps clients to “maximize” their purchasing power. In the post-show commentary, our Dragon’s Den (or Shark Tank if you prefer) panel of experts provide their take on the interview and offer advice to the company. In today’s review Buyers Meeting Point’s Kelly Barner will provide her take on cloudBuy;

The cloudBuy solution is an interesting approach to managing what are likely high-volume, low value transactions. If I worked for an organization that was considering outsourcing the responsibility for tactical purchasing administration to a third party, I would seriously consider this as an alternative. You get all of the benefits associated with handing non-strategic spend off to an organization that can manage it more cost effectively without introducing the scary, slippery-slope idea that procurement can be outsourced.

cloudBuy allows companies access to suppliers through their eMarketplace while still ensuring negotiated pricing, individual approval levels, and integrating with legacy ERP systems. They support the entire procure to pay process, including an embedded Visa credit card account. One of the side benefits of their reportedly B2C-esque interface is that they decrease maverick spending by (a) making it easier for buyers to abide by established processes and (b) making more suppliers ‘on contract’ or at least approved for purchases.

I appreciate that they make it easier for buyers and suppliers from different size organizations to connect by leveling the playing field for small suppliers more than is seen in other marketplaces. Co-founder, CIO and Chairman Ronald Duncan made a valuable point in his ‘Year in the Life’ Blog Talk Radio interview when he spoke about the risks associated with over done supply base rationalization. Although supplier consolidation creates pricing leverage and other efficiencies, it also introduces risk in the form of supply chain shortages and disruptions.

It isn’t clear to me how procurement organizations negotiate pricing with (previously uncontracted) suppliers they approve for their organization’s buyers to use through cloudBuy, although the idea of item level price benchmarking and recommendations is very appealing. While the categories and type of spend that are the best candidates for managing via cloudBuy were unlikely to be sourced cost effectively through traditional processes, many procurement organizations may be hard pressed to let go of the need to manage the spend hands-on.

A few follow up questions for the cloudBuy team:

–cloudBuy is available on any internet capable device. Is there a dedicated App, or is the website design just responsive to mobile devices?

–One of the benefits of helping buying organizations connect with a variety of suppliers through the cloudBuy eMarketplace might be deliberately purchasing from local or diversity suppliers. Is this something buyers can search for and report on to meet their internal supplier inclusion targets?

–For companies that don’t have contracts in place with suppliers in the cloudBuy eMarketplace, do you offer GPO-type pricing leverage that allows unconnected buying organizations to benefit from their collective purchasing volume?